On November 21, the TTC Board approved the fare increase proposed by staff in their Operation Budget for 2017. Adult and Senior/Student token/ticket fares will rise by ten cents to $3.00 and $2.05 respectively. Metropasses for both fare classes will rise by $4.75 with the result that the “multiple” (the ratio between the pass price and the single token/ticket) for seniors/students drops slightly (by about 0.5) while for adults it is unchanged. Here is the full table of old and new fares.

There was a long parade of deputants at the meeting who, despite a motion by Deputy Mayor Denzil Minnan-Wong to limit presentations to three minutes, mostly managed to push the envelope out to the normal five minutes simply by taking a rather long time to “wrap up” when Chair Josh Colle gave the three minute warning. Their comments overwhelmingly spoke to the effect of a fare increase, but also to the question of service quality. Despite the TTC’s claims that they are not limiting service growth and causing crowding, actual experience does not match these claims, a point echoed by Councillors who sit on the TTC Board and who receive many complaints about this from their constituents.

To soften the blow, the TTC Board voted to direct staff to prepare the 2018 budget on the basis of no fare increase so that, in effect, over a two year period fares would only have gone up five cents per year. This is a Catch-22 decision going into an election year because somehow Council will have to find the money to pay for the idea just when tax increases are regarded as political suicide, but service cuts would be equally unpalatable.

The most contentious part of the debate turned on Appendix C to the report which described various options for higher fares and lower service. Included on the list was the cost of free passes for the Blind and War Amps ($2.1 million), and even considering this shows a breathtaking insensitivity.

This was described by CEO Andy Byford as the “Armageddon Appendix” in an interview with CBC’s Metro Morning, an presents a menu of extremely unpleasant options to close the remaining gap between TTC’s planned revenue, including the fare increase, and projected costs. This amount has three components totaling $99 million:

A $35.1 million shortfall in the “conventional” system’s operating budget.

A $26.4 million shortfall in the WheelTrans operating budget.

A proposed transfer of $37.5 million from the TTC’s operating budget to the City’s capital budget. This scheme has not been endorsed by the City Manager, and is simply an accounting trick to bump the TTC subsidy without showing it as part of the annual increase. Either way, it would mean increased City spending whether as “operating expense” or “capital from current”.

Byford was at pains to emphasize that he would not recommend any of the changes, but produced the list because he was asked for it. What is missing, of course, is a sense of the effect of any of the changes at the individual level: how many riders benefit from which discounts, which services would be affected by changes to standards? It is easy for the budget hawks on Council to talk about “efficiencies” when they are single-line descriptions, a dollar amount, but with no specifics about what would happen.

For their part, members of the TTC Board seemed unable to grasp the difference between sending an unbalanced budget to Council without recommendations on how to fix it, as opposed to taking a strong stand saying “we oppose these cuts”. This evolved as the meeting wore on with some recognition of the need to take a stand, but this did not find its way into the final motions (see below).

The Board may have punted the issue over to Council, but nothing prevents Council from saying “TTC, you are only getting this much subsidy, you figure out how to deal with it”. Even a desire to save service improvements implemented at Mayor Tory’s behest will require someone to decide either on new revenues to fund transit, or on which of these improvements will die on the altar of “efficiency” and “saving taxpayer dollars”.

Updated Nov. 19, 2016 at 10:10 am: The TTC has updated their comment on the status of the service improvements implemented in 2015-16.

Identifying the specific routes which would be affected would be done in 2017 following a review of the initiatives implemented in 2015-2016. [Email from Stuart Green]

The Star’s Ben Spurr had an article on November 18, 2016 about the degree to which the TTC fails to meet its own service standards for vehicle crowding.

The many debates about budget and service routinely ignore the question of whether the TTC actually meets the Board-mandated standards, and instead we are treated to complaints from the budget hawks about poorly performing services.

In my review of the proposed 2017 operating budget, I noted that the traditional targets of such complaints do not offer much latitude for savings, while much more money is on the table from potential reductions of service quality and reversal of the recent Tory service improvements such as the 10 minute network.

For reference, here are the current standards taken from the TTC’s website:

The TTC has provided the detailed list it sent to Ben Spurr, and here it is.

The list comes with various caveats from the TTC, notably that many of the routes that are “over” the standard are only slightly past the line by say a few passengers over the target.

In a nutshell, 43 of the TTC’s bus and streetcar routes exceed crowding standards at one or more periods during the week and on weekends. In most cases, though, the average number of passengers per vehicle is only slightly in excess of our crowding standards…one or two people in some cases.

The standards, as the chart in the PDF illustrates, vary between periods and vehicle type. Also, in off-peak periods, the standard is the number of seats on a vehicle. So if just one or two people are left standing, that would exceed the standard but is not overcrowded, per se. [Email from Stuart Green in TTC Communications]

As regular readers know, I have written extensively about service reliability on the TTC. This affects the actual quality and capacity of service in many ways:

Vehicles that are bunched often have extra space on the second (third, etc) vehicle because everyone boards the “gap” vehicle. A strong inventive for this behaviour is that dropping back to a following, less crowded vehicle may leave the rider turfed off when it short turns. Despite TTC claims that total short turn counts are down, this remains a problem and rider behaviour reflects their experience.

The number of vehicles per hour operated is not always the scheduled value. Therefore the actual capacity of the route could be less than advertised.

On routes with articulated streetcars or buses, regular single-section vehicles can often be found in place of artics. The result is a loss of capacity and greater than scheduled crowding.

Past observations by TTC planners have rather quaintly observed that the cheapest “new” capacity one can provide is to operate reliable service so that loads are evenly distributed. I leave it to readers to contemplate the degree to which the TTC achieves this, especially when it has a six-minute wide window within which vehicles are “on time”. For frequent routes, vehicles in pairs can be on time even though they provide gappy service. This is a very long-standing problem, compounded by the fact that the TTC does not even regularly meet its rather generous “targets” for headway reliability.

I asked the TTC how the average loads are calculated as reported in their tables. Specifically, is the average calculated based on the observed number of vehicles, or on the scheduled service, and is the percentage of load based on the scheduled vehicle type rather than what actually operates. The TTC replied that the capacity used to calculated the percentages is based on scheduled values and vehicle types, not on the service available to riders on the street.

This is an important distinction for routes with erratic service and frequent replacement of large vehicles by smaller ones, notably 501 Queen. It is quite possible that the actual average loads considerably exceed available capacity even though they may fall within theoretical values based on the schedules. What may look like a seated load on paper could well have a considerable number of standees because headways are wider and/or vehicles are smaller than planned.

One might reasonably ask for additional information that must be available from the underlying TTC data:

What is the actual capacity of the service operated against which the crowding values are calculated?

How variable is the headway (maximum and minimum values, percentage of vehicles close together, etc.)?

With respect to monitoring service for schedule changes, the TTC says:

The specific decisions on when and where to adjust service to these standards are made by TTC staff. In a typical year we make more than a hundred service changes. We regularly conduct reviews of ridership to assess needs across all routes. If there is a route that needs some additional service, we will try to balance that against a route that may have capacity to spare.

In a large, busy system such as the TTC’s there are always some routes at any point in time that have crowding that exceeds the crowding standards. And while we would obviously prefer our customers are not on crowded vehicles, we have to balance the availability of resources like vehicles and operators with delivering service to the entire city.

Through regular service reviews and with arrival of the new vehicles, there is an opportunity to increase capacity on some of the busier routes like the 504. In particular the TTC’s new high capacity low-floor streetcars will assist in reducing overcrowding on our streetcar routes.

There’s a bit more to things than this reply lets on. Every year there is a “Service Budget” (the one for 2017 was probably set a few months ago), and Service Planning works within this to allocate service to the available resources. However, a critical component is the number of available operators and this runs into the dreaded budgetary problem of “head count avoidance”. In off peak periods, routes may cry out for more service, but vehicles will sit in the yards if there is nobody to operate them.

Yes, the TTC’s new cars will help to reduce crowding when and if they actually arrive, and when they start operating on really busy routes like King. On 510 Spadina, the introduction of low-floor cars was accompanied by a cut in the number of vehicles in service, although the net change remained an increase in capacity. This has long been an issue in plans for fleets of larger vehicles because in some cases, notably the conversion of bus routes from regular to articulated vehicles, the “new” service has roughly the same capacity as the old by the simple expedient of running two artics where there previously had been three regular sized buses. Years ago, the same fate hit the 501 Queen car, and service quality (not to mention ridership) has never recovered.

The TTC’s first goal for many on Council is to reduce costs, not to increase service, and claims that there will be more capacity must be tempered with the observation that such an improvement may not be “affordable”. Just look at what happened with 514 Cherry which was supposed to be a net addition to service on King Street, but which the Commission refused to fund. The result was that service was reallocated between the 504 and 514 routes with only a modest improvement in the portion of the route where they overlap. (The question of how irregularly the 514s actually appear is another matter.)

Going into a year where the Service Budget is planned to rise only by 0.4%, there is not much headroom for more capacity, and anything added on one route will inevitably be taken from another. This may be “efficient”, but it runs headlong into policy objectives such as the core network of 10 minute services, all-day service on all routes and the existing crowding standards. As the budget report showed, there is not much available to trim from the lightly loaded routes when resources are needed on busy routes elsewhere, and the more likely situation will be to pack in more riders.

The problem is even worse if the TTC contemplates relaxing the standards so that average loads on vehicles will rise. We already know from experience that many routes are crowded, and the last thing they will need is less service and even worse travel conditions.

I asked whether the cost estimates for savings on these proposals included detailed lists of possible service changes. The TTC replied:

The table shows broad categories that generally would reflect the reversal of service initiatives implemented in 2015. The specific service changes within each category have not been identified.

This was further qualified in a separate email after this article was published:

Identifying the specific routes which would be affected would be done in 2017 following a review of the initiatives implemented in 2015-2016.

What a marvelous way to short-change debate – don’t tell people what the actual effects might be. This is precisely the sort of campaign one would expect from an anti-transit Council or Mayor who would say “this won’t hurt too much”, or so a Councillor could claim they never knew the details of what was planned before it happens. Will someone on the TTC Board please make an official request for the details before this goes to Council?

On a more general note, the primary function of the TTC is to provide transit service. The Board sets policy and sits back expecting that service actually operates within those parameters. However, there is always a Catch-22, the caveat in any policy “subject to budget availability”. This allows the Board to pass a policy promising the sun, moon and stars to transit riders, but it’s ok if staff only delivers a few minor planets in a far-off galaxy because they couldn’t afford to deliver more. Meanwhile, Council blithely approve billions in spending on capital projects.

This is not to say that those capital projects are unneeded (that pitched battle has been debated elsewhere), but it is a double standard to treat capital funding as something we must do as an integral part of city growth and prosperity while at the same time starving day-to-day service because keeping taxes down is the paramount goal.

Every month, we see a CEO’s report from Andy Byford full of beautiful pictures and graphs, but with very little commentary on the basic question: are we providing the service that Toronto needs, and if not, what do we have to do to achieve this?

It’s all very well to have customer surveys and indices of station cleanliness, but what about the actual service on the street? Is the plateau in ridership related to the system’s inability to carry more riders or to attract business?

TTC staff are supposed to be producing a new Ridership Growth Strategy for the TTC Board in January. It’s a shame this wasn’t produced as an integral part of the budget. How bad is the service today? Where can it improve? How much more would be possible and at what cost? Those are questions no penny-pinching Mayor wants asked let alone answered.

In a few days, the TTC Board will consider its 2017 budget, and we will see just how much appetite there is for forcing Council to cough up the money needed to run the transit system, to pay for all those photo ops a few years ago when John Tory claimed he would reduce the damage wrought by Rob Ford.

The TTC’s 2017 Operating Budget will be discussed at a special Board meeting on Monday, November 21, 2016. When work began on this round, the TTC stared at a $231 million hole in its potential 2017 funding, and it was apparent that the Mayor’s request for a 2.6% cut in subsidy was small change beside the TTC’s much larger problems.

Updated November 17, 2016 at 6:40 pm: Responses from the TTC clarifying the treatment of externally recovered costs have been added to this article.

The Budget Report is now public, and initial media comment suggested that the TTC had wrestled that huge potential deficit to the ground. However, a lot of that is spin and accounting trickery, not a real reduction in the TTC’s needs.

Still facing a gap of $61 million, TTC management list many unpalatable ways that operating costs could be trimmed. In effect, the message to Council, and especially to Mayor Tory is this: being a “transit mayor” costs money, and it’s time to pay up.

This article looks at the Operating Budget, the one that provides service and handles day-to-day maintenance activities. In a separate article, I will review the Capital Budget.

Understanding The Budget Mechanics

The TTC (and all City agencies and departments) begin work on their next year budget midway through the year. The 2017 budget has been “in the works” for months and in many ways is based on 2015 rather than 2016 results because the year was barely half-over when the 2017 budget cycle started. This can lead to problems when the “current” year does not turn out as expected as happened in 2016.

An important first step in looking at TTC budget numbers is to recognize that any year-to-year comparisons are relative to the 2016 budget, not to the probable actual results for the year. This has some important effects:

The fare revenue projection for 2017 is based on a lower projected ridership than was used, but not actually achieved, in 2016. Therefore, revenues go “down” in this budget (without allowing for effects of a fare increase) simply to get the estimated ridership back to a reasonable level. 2016 was described as a “stretch target” for ridership, and the budget elastic didn’t stretch as far as hoped.

Some 2016 costs are coming in under budget, notably for employee benefits but also for diesel fuel. These are savings in actual spending in 2016, but they also show up as “reductions” in 2017 when they are rolled into the budget. It is important to distinguish between reductions in costs that affect actual spending in 2017 as opposed to simply being a lower budget number.

The 2015 budget included a “capital from current” item for the purchase of new buses. This is not an “operating cost” in the traditional sense, but it avoided putting the item on the City’s Capital Budget. For this reason, 2015 is an odd year in any stats unless the capital portion is factored out (notably from the claimed subsidy per rider). There is no such payment in 2016, and so a direct comparison with 2017 is possible without adjustments, at least until some of the TTC’s new budget tricks are factored in. For 2017, the TTC proposes to shift some operating costs onto the Capital budget and, as a result items that were billed to “operations” and counted as part of the rider subsidy in past years would disappear. The City Manager’s Office does not concur with this tactic. The point here is that year-to-year budget and subsidy comparisons cannot always be made without adjusting the figures to a common basis.

Another important factor is that in the total numbers reported in the media, the “conventional” and Wheel-Trans (WT) budget numbers are often conflated. When demand for WT is growing quickly, as is now the case with improved eligibility criteria from Queen’s Park, costs for this service grow proportionately. This cannot be wished away by budget hawks who care only to limit tax increases, but worse it can create a situation where the conventional system is pillaged for dollars to handle the WT demand. That is not the sort of conflict we should be seeing in budget debates, but it is inevitable when the extra cost of WT for 2017 is almost equal to the revenue from a 1% property tax hike.

Finally, there is a distinction between true savings that represent lasting reductions in expenses, and one-time benefits from procedural changes or special accounting provisions. The impression can be given that a budget is in much better shape than reality by giving the impression that a large initial deficit can be whittled down.

Getting From $231 Million to $61 Million

The budget gap was “closed” by a number of measures, some of which are simply savings against the 2016 budget that are carried forward into 2017. On an “actual spending” basis, the savings have already happened. They are not the result of new, recent actions by TTC management.

As I reported previously when reviewing at the Budget Committee discussions, the reduced healthcare costs were actually achieved as a saving in 2016 against that year’s budget. They are a reduction in 2017 only on a budget-to-budget basis because the $10.3 million was part of the 2016 budget as a starting point.

The recommended savings in the current report are:

Reduced PRESTO fees due to the delay in rolling out Metropass support. With less of the TTC’s revenue flowing through PRESTO, the cost of serving this does not have to be included in the budget. Note that this treats PRESTO costs as a net addition and does not include an offsetting saving in handling costs for Metropasses likely because the two modes would co-exist during a transition period.

As in past years, energy costs are expected to be lower than the previous year’s budget level. The saving shown here is $12 million, but $5 million of that is already projected to be saved in 2016 actual results as per the October 2016 CEO’s Report, p. 50.

Capitalization of City construction impacts. When the city tears up a street (for example the Queen Street watermain project now underway), the TTC incurs extra cost to divert and supplement service. This has been borne out of the operating budget but without an explicit chargeback to the capital project for which this should rightly be a cost. This appears to be a new practice for 2017 and it is unclear whether the City and its agencies have agreed to pay these charges. (See update below)

Elsewhere in the budget, there is a section on cost recoveries from Metrolinx for its construction project effects on service. This would be done on a cost recovery basis as with City construction, but it is unclear why one of these has been included as a “saving” but not the other. (See update below)

Delays in Bus Reliability Centred Maintenance. TTC management had proposed a higher fleet spare ratio and maintenance practices to pro-actively get ahead of failures rather than doing predictable repair work after a vehicle had already passed the likely failure time and possibly actually broken down in service. In the Capital Budget, the TTC is proposing a very large order of buses to replace the Hybrid fleet before its due date, and this would reduce maintenance needs by substantially lowering the average age of the fleet. It would also place a large chunk of the fleet under warranty effectively transferring operating maintenance costs to the Capital budget. This tactic has a downside as the TTC has seen in the past when a homogeneous fleet reaches its non-warranty period, and later the higher cost of maintenance (and staffing requirement) of older vehicles. This is a time bomb built into the budget even though it could “solve” a short term problem.

Reduced contracted services. It is unclear what this refers to, and I have sought details from the TTC. The largest “contract service” the TTC has is the provision of service in York Region, but this is done on a full cost recovery basis. If YRT takes over a service the net change to TTC’s budget should be zero. (See update below)

Update: The TTC has clarified the handling of externally funded costs in an email from Vince Rodo via Brad Ross.

With respect to City construction projects:

It has been a long standing practice for the TTC to charge the incremental cost of service to TTC capital projects. For example, when we tear up streetcar track, we run replacement bus service during the construction period. We charge the difference between the regular streetcar service and the bus service to that project as part of the cost incurred because of the project. In the past, we have not done that for City of Toronto construction projects. The city has agreed that the practice for TTC projects can be used for city projects too. So for example, if the city were closing an intersection for work and we had to re-route service round that, we will now be able to calculate that extra cost and bill it to the city, who will charge it to that project. Since these costs had to be covered by the TTC operating budget in the past, they have been included in the TTC operating budget. From now on, they will not show in our expenditures because there is no net cost to the TTC.

With respect to Metrolinx cost recoveries:

The Crosstown Master Agreement calls for Metrolinx to reimburse the TTC for incremental operating costs associated with the impact of Eglinton Crosstown construction on TTC service. For 2015, we billed them and they reimbursed us for $5.2 million. I don’t have a final figure for 2016, but I suspect it will be in that range. That is not included in our budgets because there is no net cost to the TTC. For 2017, it is similarly not included in our budgets because once again there will be no net cost to the TTC. So the treatment of this and the city construction above will be completely consistent on a go-forward basis: no net cost included in the TTC budget. We flagged this in the 2017 budget report because: (i) the quantum is increasing substantially in concert with the ramping up of Crosstown construction, (ii) it stays high for at least the next 5 years and (iii) because we are hiring 169 TTC employees to provide this augmentation of our service. If it were the same range as 2056 and 2016, we may not have highlighted it.

With respect to York Region cost recoveries:

The service the TTC operates in York Region under contract to YRT is included in the budget as both an expense and a revenue and that has been the case for decades. It is the service they request us to operate on their behalf.

With respect to contracted services:

The “reduced contracted service” has nothing to do with any of the items mentioned above. It has to do with reduced purchases of services such as IT, human resources, IT licenses, cell phones, etc. No impact on service on the street. It all about saving money everywhere we can.

The different treatment appears to arise from whether there is a net delta in the budget (i.e. a new condition, and therefore reported as a budget-to-budget change) or a continuation of an existing practice where costs and expenses always balance out. [End of update]

Four additional sources of revenue or savings are proposed:

A draw of $14.4 million from the Transit Stabilization Reserve. This money comes from “surpluses” (planned subsidies that were not needed in good years) that have been banked against lean years of which 2017 is most definitely one. This is not a “saving”, but rather one time revenue that can offset the budgetary pressure for 2017 only. The underlying costs will not disappear, and they will show up as part of the 2018 pressure.

A fare increase of 10 cents on the adult token rate, pro-rated through other types of fare (the details are discussed later in this article). The added revenue is net of the anticipated loss of riders. If pushback from the increase is less than expected, then the TTC could do better with new riders than planned, but many other factors will affect riders’ decisions about staying with transit.

The TTC proposes that the cost of new batteries for Hybrid buses of $8.5 million be transferred to the Capital budget. This is an interesting accounting debate because parts replaced during a major bus overhaul (typically at mid-life) are paid for from capital, while parts replaced in normal day-t0-day maintenance count against operations. However, the lifespan of these batteries is short enough that capitalization is an odd treatment.

Some TTC capital assets are not subsidized by the City in part because their lifespan is too short, and in some cases this is likely a holdover from the days of provincial subsidy when certain items were excluded from that funding. As an accounting mechanism, the TTC funds these purchases out of working capital, and recovers the money as a depreciation charge against the operating budget over their lifespan. The TTC proposes that this amount be treated by the City as a capital cost thereby shifting $29 million out of the operating budget.

The City’s response to the final two items is not exactly welcoming:

Both of these items were reviewed with City staff and not supported because they reflect a shift from the operating budget to capital, requiring City capital funding. Staff suggest these items be given further consideration by the City as they might help address the operating pressures while immunizing customers from service adjustments or further fare increases, to the extent possible. [pp. 5-6]

Fare Increase Options

TTC management recommend a ten cent increase in the adult token fare from $2.90 to $3.00 with proportional changes in all other fares except cash which would stay at $3.25. This is expected to bring in $27 million in new revenue, net of the loss of 1.2 million riders and the PRESTO fees that are a percentage of the revenue stream.

There is no discussion of the issue of special fares as a social benefit, and that issue will get tangled up in proposals to deal with the (at least) $61 million remaining gap between projected revenues and expenditures.

One set of proposals involves larger fare increases. These would inevitably trigger higher ridership losses than the proposed ten cent level, but this is really uncharted territory for the TTC. Moreover, there is the question of perceived value, and whether riders feel they would actually be ripped off by a fare increase if service did not materially, and fairly quickly, change for the better. Paying more for what many perceive to be inferior and declining service is no recipe for retaining customers.

In addition to fare increases, there is the question of the many forms of discount fare. The table below shows the estimated “cost” to the TTC of these fares. This is the sort of issue where fare:ridership elasticity can get very tricky depending on the nature of each market and the extent to which elimination or reduction of a discount is considered to be “unfair”. A related problem is the TTC’s perennial treatment of these concession fares as a cost, as if giving people cheaper rides drives up the cost of service, or represents revenue that might be available if only we could get everyone to pay a higher fare. This is directly contrary to many City objectives to reduce barriers to travel among many groups of citizens, and the recognition that mobility has a value.

Note: The 8 million lost rides by children does not incur a cost because they are travelling free today. However, it is an indication of how much more riding is done today by children, and the degree to which this unexpected bump in one rider class is masking declines in others, notably adults.

Service Cuts

Another way to trim the TTC’s budget gap is to roll back service improvements, possibly even to levels below those imposed by the Ford/Stintz regime. This would be a bitter pill for the “Transit Mayor” to swallow, and in the midst of such grandiose spending plans as we see on major capital projects, the idea that these services would not be funded should be deeply embarrassing.

This table shows quite clearly that the usual poster children for “waste” in the transit budget will not yield a great deal of savings, notably the “low ridership, high subsidy routes” and the night services. The big money is to be found is reducing Service Standards, and rolling back both the 10 minute network and the full service 19-hours-a-day policy.

Here are the current loading standards for TTC vehicles. Note that these are based on averages over a peak hour and some vehicles will have more passengers while others are half-empty either due to bunching, or because they are short-turned and are of little use to many riders. The TTC only reports averages, not max-min values nor standard deviations.

As things stand, the service budget for 2017 includes:

A 0.4% increase over the budget for 2016 for the target ridership level of 545 million, but no provision for ridership growth.

Annualization of improvements made in 2016 including express buses and earlier Sunday service.

Restoration of full streetcar operation on all routes including the conversion of 511 Bathurst and 514 Cherry to Flexity operation.

Opening of the Spadina extension (TYSSE) in December 2017 and concurrent reductions in contracted service for York Region.

Provision of new bus service to the Renforth Gateway.

Major Changes in Expenses

Several cost areas will contribute to the increase expense budget for 2017:

Collective bargaining agreement increases: $24.3m

PRESTO commissions and new faregate maintenance: $14.5m. This cost is almost entirely due to PRESTO fees because maintenance costs on the new faregates are largely offset by savings in maintenance on the old ones. At this point there is no offsetting saving shown for staff reductions due to PRESTO, but a discussion of this comes up later in the report.

TYSSE opening: $6m for 2017, projected at $30m for years following. Note that the extra cost of operating the extension is equivalent to revenue from a 1% property tax increase.

Cap & Trade: A $5.2m additional cost in fuel. According to the report “This is expected to increase the TTC’s diesel costs by 4.7 cents per litre and its natural gas costs by 3.3 cents per cubic meter.” The TTC has not produced consolidated figures showing the combined effect of price changes in fuel, the benefits of hedging, changes in consumption, and the new tax.

Hybrid bus battery modules: $8.5m. This is an operating cost that the TTC seeks to transfer to the Capital Budget as described earlier.

Traction power and utilities: $5.5m. Again, it is clear that “lower energy costs” of $12m cited as savings earlier in the report have offsets elsewhere in the budget.

A full list with explanations is in Appendix D of the report.

Workforce Effects

A perennial issue at City budget time is the matter of “headcount”, to the point that some Councillors fetishize this to the exclusion of any other measure of a budget. Transit service, of course, requires people to operate and maintain it. If you buy a bus or a subway train, someone has to drive it, someone has to maintain it, and in the case of a subway, someone has to maintain the infrastructure the train runs on. The TTC projects changes in their workforce for 2017, but the big increases come in two areas: operators needed to provide service that will be paid for by others (Metrolinx) resulting from their construction projects, and additional staff needed to operate and maintain the subway extension net of savings on the surface network.

Of the 210 staff covered by 3rd party payments, 169 are for service operation in the Eglinton corridor where the TTC expects to receive $72.5 million from Metrolinx from 2017 to 2021. 36 are to provide frontline PRESTO support for which Metrolinx is responsible, but the TTC is acting as their agent. The remaining 5 are for vehicle repairs that are charged to others.

The staffing required to open a subway extension is considerable as shown in this breakdown for the TYSSE. Note that the saving in bus operators is considerably lower than the extra staff needed to operate and maintain the subway.

As for the PRESTO rollout, the lion’s share of savings from elimination of Station Collectors will be offset by the new staffing model for subway stations. Something that the TTC has never made clear is the degree to which the value of the Collectors was included in the fare collection costs that PRESTO is supposed to offset. Whether the “evolution” of stations will “meet and exceed customer expectations” is difficult to say considering that we still do not know the actual function and service quality the new Customer Service Reps are expected to provide.

A complete description of the purpose of all workforce changes is in Appendix G of the report.

Wheel-Trans

The Wheel-Trans budget is a major source of cost pressure for the City of Toronto. Demand is rising quickly due both to demographic changes and increased eligibility mandated by Queen’s Park. It should be noted that the TTC (and other municipalities) receive no provincial subsidy for their accessible services. Indeed, the cost of running WT in 2017 will be about 90% of the value of the operating and capital gas tax contribution Ontario makes to Toronto. This is not to suggest that increased WT service is bad, indeed it is long overdue, but to show the relative level of provincial support for transit generally against the cost of providing just this component.

Wheel-Trans expects to carry 28% more trips in 2017 than in 2016 which itself is expected to be 14% over 2015. WT has almost no revenues (fares cover a trivial amount of the total cost), and this rate of increase means a big jump in subsidy requirements from the City. The extra demand is projected to add $24m to the WT budget offset by only $1.5m in fares.

There is a very small increase in WT workforce because the additional trips will substantially be handled through contract services, not the TTC’s own fleet. Indeed, the TTC projects a reduction of trips carried on WT vehicles as trips shift to other modes and as the new “Family of Services” program diverts more trips to being partially served by the conventional system (i.e. WT handles the “last mile” portion of a trip between a subway station and the rider’s origin and/or destination).

How successful the TTC will be in shifting its WT demand between various types of service remains to be seen. This will involve not just a more complex booking system, but also the ability to ensure that connections between legs of mixed-mode trips actually work as planned.

Accessible transit is a fast-growing part of Toronto’s network, and City Council should ensure that it can be properly funded without endangering the base system used by all riders, including ambulatory WT passengers who can, in part, ride conventional transit if it is “there” and not crowded or erratic beyond their endurance.

Ridership Growth Strategy

At Budget Committee meetings, there has been talk of a new “Ridership Growth Strategy” to improve the TTC’s attractiveness and to return to an era of steady growth on the system. A report on this is supposed to be coming before the TTC Board early in 2017, although the rather grim situation painted by the budget report suggests this will be a wish list for the future. One might joke that it’s just the sort of thing someone might run on for re-election in 2018, if only there were a sense that there would be political support to pay for it.

Just keeping the TTC at the level it is now at in service and fares will be a huge political struggle with a Mayor and his supporters on Council who cannot get past their promise to limit tax increases and fund any growth or improvement from those mythical “efficiencies” we have heard about for years.

Anyone who looks through the list of “savings” in the TTC budget will realize that little of the reduction from that original $231 million gap for 2017 and the now-proposed $61m number is due to management actually squeezing blood (or possibly gravy) out of a stone. Some is the luck of changing costs, some is a matter of accounting, and some is wishful thinking that the City will take on more costs without actually treating them as part of the “operating subsidy”.

Reformattied chart pages so that data for years 2014, 2015 and 2016 appear on separate sheets.

With the launch of Toronto’s TOCore project, the city set in motion a complete rethink of what “Downtown” means and how it will evolve in coming decades. On some counts, one might argue that this work is long overdue as concentration of office and residential space in a very small area brings many problems for residents and businesses, not to mention a very competitive demand for a crucial resource – road space.

I will leave the debate on many of these issues to other people and forums, but as this is a transit blog, my focus is on understanding how transit works (or doesn’t) and what effects might result from various proposals.

In the Globe & Mail, Oliver Moore writes about “Complete Streets” and how this design philosophy could affect Toronto. Without question, better attention must be paid to improving the safety and usability of major streets by pedestrians (who are also transit riders) and cyclists who collectively outnumber the motor traffic.

King Street has long been the busiest of the downtown streetcar routes carrying about 65,000 riders every weekday. But these riders do not all travel to and from the business district at King & Bay, nor do they all travel in conventional am and pm peak commuting times. New demands on the shoulders of downtown such as Liberty Village and the St. Lawrence district include not only residents bound for jobs at Bay Street, but workers and students headed to offices and schools on counter-peak trips. Indeed, the term “counter peak” can seem odd when one looks at some of the demand patterns.

In 2014-15, I was retained by the City’s Transportation Department and the TTC to review the major streetcar routes with a view to identifying locations on the shoulders of peak periods where parking and turning restrictions should be extended beyond the traditional two hour window. As a result of this and other surveys conducted by the City, traffic regulations were changed in several areas. This brought some improvement, typically eliminating anomalies where the pm peak, for example, actually was worst for transit service in the hours just before and just after the “official” rush hour.

However, that review was considerably smaller than the goals of TOCore. A redesign of a street like King is an all-day effort, and one that could, depending on its scope, affect a great deal of the streetcar route. This is not a case of tweaking a few hours a day, but of reinventing the street.

Back in June, an Op Ed from Mayor Tory appeared in the Toronto Star extolling the virtues of the Scarborough Subway. Torontoist, intrigued by how this piece came to be, made an FOI request for correspondence in the Mayor’s office. The result is an article and associated copy of the FOI response.

Tory’s article triggered a response from Michael Warren, a former Chief General Manager of the TTC. I have no brief for Warren himself, but what was intriguing was how the Mayor’s staff reacted with a need to debunk Warren. The following memo from the Mayor’s Chief of Staff is among the FOI materials.

This memo is full of misinformation, but it gives a sense of the mindset in the Mayor’s Office and why so many statements from Tory simply do not align with reality.

… greater use of existing GO rail tracks … six new stations …

The original SmartTrack plan was for a “surface subway” that would carry 200,000 passengers per day using capacity in the GO Transit corridors. However, this plan depends on key factors including good integration with TTC service and much more frequent trains. SmartTrack is now reduced to nothing more than GO’s already planned service stopping at six extra stations. That is not “greater use” of tracks beyond what would have happened with GO’s RER plan. Even the ability to make these stops with little or no penalty in travel time results from GO’s planned electrification, not as part of SmartTrack.

GO Transit has no interest in the work of upgrading signals on their corridors to accommodate the level of passengers implied by that all day count, and hence the network “relief” claimed for SmartTrack cannot possibly materialize without significant new investment.

Tory’s campaign literature talks about a “London-style surface rail subway”. In Toronto, the word “subway” means service that is at worst every 5 minutes, not every 15, and it’s that convenience the campaign expected people to key in on. Some of the timetables for London Overground do feature very frequent service at a level GO’s signal system (let alone Union Station’s platform arrangements and passenger handling) cannot hope to accommodate.

A recent City backgrounder on proposed new stations shows that they will attract some, but not a vast number of new riders. That’s why they were never in GO’s short list of potential stations to begin with.

At these six new stations, trains will come every six to ten minutes in rush hour. That’s better than what candidate Tory promised … every 15 minutes or better. And to be clear, the provincial RER model sees trains coming every 15 minutes.

Actually, the provincial RER model already sees trains coming more often than every 15 minutes during peak periods and the improvements are not confined to the SmartTrack corridors (Stouffville and Kitchener) or to the City of Toronto. Queen’s Park has made no move to bill Toronto for extra service above levels planned for RER, and therefore we must conclude that none is planned.

SmartTrack was always envisioned as a beefed up version of RER; more stations in Toronto, more access for riders, faster frequencies and a TTC fare.

In fact, there is no “beef” in SmartTrack, and its only contribution will be for those who live or work near the six new stations. The service levels are part of GO RER, nothing more. As for a TTC fare, this is far from decided, and the likely cost to Toronto to support such an offer is fraught with problems. There is the obvious question of where the operating dollars will come from, but moreover riders on other GO corridors within the city might reasonably ask why they don’t get the same deal.

Conversely, some of the Metrolinx machinations about “Fare Integration” have suggested that subways might be treated more like GO Transit with a fare by distance model. If that’s what a “TTC fare” for SmartTrack really means, that’s not what Tory was selling in his campaign.

… Warren suggests tax increment financing … has been abandoned. That’s flat out wrong. City staff are preparing to report back … and have already stated it “may be the appropriate revenue tool for funding …”

Warren may have been incorrect that TIF has been abandoned, although it is hard to tell because his original piece “was edited to make clear that John Tory still supports his TIF transit financing scheme” according to a correction notice following the online version of Warren’s article. Whether Tory still supports TIF is of little matter because City staff recently reported that it cannot support the full cost of SmartTrack and additional revenues from other sources will be required.

Warren … talks of the abandoned LRT option, which he says will cost $1.8 billion … The TTC said this week that building the LRT would now cost as much as $3 billion.

The infamous “Briefing Memo” from the TTC about LRT vs Subway costs provides that higher estimate, but this is based on the assumption that the LRT line would be build much later than originally planned. Most of the cost increase is a function of inflation. Also, of course, the LRT option would serve much more of Scarborough than the subway, including the Town Centre planning precinct, a fact Tory’s Chief of Staff conveniently ignores.

As for additional costs, the provincial commitments to various transit plans, including its own, have always included inflation to completion, although undue delay caused by Toronto Council’s inability to make a decision might reasonably considered beyond the level of Queen’s Park’s generosity. All the same, the $3 billion estimate assumed a leisurely LRT project schedule compared to what would have been possible with dedication and leadership.

Under the Mayor’s leadership, Toronto is moving ahead with the most ambitious, and badly needed, transit expansion in its history.

A great deal of the expansion now underway was in the works before John Tory was elected. Indeed, his campaign claimed that SmartTrack was the single project that would solve every problem, and no other transit schemes, notably the Relief Line, need even be considered. Tory has changed his tune on that, but the RL is still treated as something we will need, someday, maybe. There is no leadership on his part in demonstrating how this line would serve suburban riders with additional commuting capacity.

A recent meeting of the Corktown Residents’ and Business Association included a discussion of problems with the new 514 Cherry service. As reported by thebuletin.ca

… a resident of the King/Sumach area … commented that the screech of the streetcars turning at King and Sumach was so loud as to prevent sleep. Apparently the issue has been ongoing since the inauguration of the 514 (Distillery Loop–Dufferin) line on June 19.

…

The issue—which took the meeting somewhat by surprise—was amplified by other attendees, who also noted that there were substantial problems with streetlight timings at the Cherry/Front and Cherry/Eastern intersections, as well as with poorly-delineated turning lane stripes which have led to vehicles accidentally getting onto the streetcar right-of-way and then being unable to get off. (There have been earlier, similar incidents with the slightly older right-of-way at Queen’s Quay.)

Deputy Mayor and area councillor Pam McConnell’s office was aware of the issues and noted that streetcar service was now suspended (replaced with shuttle buses) between 10 p.m. and 7 a.m. A public meeting was subsequently scheduled with the councillor’s office and the TTC.

Problems at King & Sumach have continued since the 514 opened for service including:

dewirements causing overhead to be pulled down

derailments

traffic signals that do more to delay transit service than “prioritize” it (this is also a problem further south on Cherry)

When the TTC began rerouting the 514 service late in the evening, the alleged purpose was “railgrinding” and this is still reflected in the URL for the service notice which is called “514_railgrinding.jsp”. The activities underway at the intersection were clearly aimed at the derailment problems by altering the rail profile on the curves.

There is a long-standing slow order for east-west operation on King that has nothing to do with this, but is no doubt related to a few cases of overhead failure.

Meanwhile, the traffic signals here and at other locations on Cherry appear to be on a fixed cycle that has no relationship to whether transit vehicles are present. So much for “transit priority”.

On the subject of wheel squeal, the TTC’s official line is that the new streetcars are supposed to be self-lubricating, and that this would be triggered by GPS information. That’s a good line, but it does not fit with actual conditions.

There is a wheel greaser on the southbound approach to Distillery Loop.

The GPS-based automatic greasing has not yet been turned on for the new cars. (Anyone with contrary information is welcome to correct me in the comments.)

Most of the service on 514 Cherry is provided by CLRVs that do not have automatic greasers.

I have outstanding requests for further information on these issues to both the TTC and to City Transportation, and will update this post as and when they reply.

The TTC has launched a page with detailed descriptions of proposed route changes that would take effect when the Spadina subway extension to Vaughan (a.k.a. Line 1 TYSSE) opens in late 2017. This includes a survey of riders what they think of the new routes. The map below is taken from the TTC’s site which has much more detailed descriptions.

Note that the station now known as Downsview will be renamed Sheppard West, and the next station to the northwest will be called Downsview Park.

Pioneer Village Station (previously known as Steeles West) will be a major hub as the terminus for many TTC routes in this area. Some routes will continue to operate through York University, but its function as a terminus will be replaced by the new subway station.

In brief:

All service now provided by the TTC north of Steeles Avenue will be replaced by York Region Transit operations plus the new subway.

105 Dufferin North will be cut back to end at Steeles Avenue.

35 Jane will terminate at Pioneer Village Station, and the 35B service to Black Creek Pioneer Village will be replaced by an extension of 108 Downsview.

195 Jane Rocket will terminate at Pioneer Village Station.

108 Downsview will be extended north to Pioneer Village Station replacing the 35B service.

41 Keele will be extended through York University to Pioneer Village Station. The 41B service to Petrolia and Canarctic will be replaced by 107 Keele North.

107 Keele North will be cut back to Steeles and will terminate at Pioneer Village Station. The 107B service via Chesswood will be replaced by 117 Alness.

117 Alness will be shifted off of Dufferin/Allen to replace the 107B service in the area between Dufferin and the GO Barrie corridor.

84D Sheppard West to Oakdale and Norfinch will be extended to Pioneer Village Station.

196 York University Express will be replaced on Sheppard by an 84E Express service from Yonge to Sheppard West Station. Service to York U is replaced by the subway.

106 York University will be modified by the replacement of the large loop around York U campus with a run through to Pioneer Village Station.

Overnight services on 335 Jane, 341 Keele and 353 Steeles will now loop around the York U campus rather than only serving the existing bus terminal at the Common.

60 Steeles West will connect with the subway at Pioneer Village Station, but will not operate into the York U campus.

199 Finch Rocket will be cut back to Finch West Station rather then operating to York University.

After a day-long debate, Toronto Council has approved continuing along the path set by Mayor John Tory to study and possibly to build the transit lines branded as “SmartTrack”. Although this proposal is now much different from the scheme that was Tory’s campaign centrepiece, the idea of SmartTrack continues to receive broad support among Councillors.

The debate covered a lot of ground with two related threads: how would Toronto actually pay for SmartTrack, and how much of the larger transit network many hope to see will actually be built.

Council has yet to consider a long-term financing strategy and possible “revenue tools” (new taxes in plain English) to deal with the combined capital and operating budget demands of the would-be network. Although there was much talk of the lost decades of underinvestment in transit, Council has yet to show that it really is ready to spend Toronto dollars (as opposed to money from any other source) at the level that will be needed. City staff will present a report on financing options in a few weeks, and the reaction to this will be telling.

What Did Council Approve?

Below is a consolidation of the staff recommendations and amendments adopted by Council arranged to keep related issues together. For full information, please refer to the detailed record of the item.

Note that in all cases where approvals relate to “SmartTrack” this includes both the six new GO stations and the Eglinton West LRT extension unless otherwise noted.

Process:

(1) Adopt the “Summary Term Sheet and Stage Gate Process” which includes details of the many parts of the proposed agreements and (2) authorize the City Manager to negotiate and execute agreements with the province to implement this.

(3) Request staff to report at Stage Gate 5 for final approval of full funding for SmartTrack. A report on more definitive costing and the financing funding strategy has been requested for an earlier step in this process. See (18) below.

(5) Proceed with planning and design for the six SmartTrack GO stations, report back to Council, and launch the Transit Project Assessment Process (TPAP). This was amended by two further requests that the work include improvement of:

the placement and access points of the Liberty Village Smart Track Station to maximize connectivity, and

pedestrian connections to the existing Exhibition Place Station for both Liberty Village and Exhibition Place.

(6) Confirmation of city support for transit supportive land use plans for areas around the SmartTrack and GO RER stations. Amendments related to this included:

Amending the development strategy for public lands at stations, including air rights, to create ongoing operating revenue streams from development resulting from that strategy.

Directing the Chief Planner to report in January 2017 with options to develop a comprehensive plan for managing development and growth related to transit expansion.

Confirming that the Official Plan as well as other plans, bylaws and policies, are not changed by this decision on this item. The intent of this is to forestall any claim for additional density by would-be developers in advance of the passing of updated plans for area affected by transit projects.

(7) Proceed with planning and analysis of the Eglinton West LRT extension up to Stage Gate 3 including finalization of stops and grade separations, provide a scope for this project up to the Renforth Gateway, and provide a class 4/5 estimate of the project’s cost, and conduct the TPAP. Note that this is a more restrictive approval seeking more detail than in the case of the ST/GO stations in (5) above.

(8) Request a financial contribution from Mississauga and Pearson Airport to the outside-416 portion of the Eglinton West extension.

(9) Ensure that the proposed new station design at St. Clair and Keele includes improved road operations and is co-ordinated with the St. Clair West Transportation Master Plan. A significant part of this would be the widening of the underpass east of Keele Street to remove the existing choke point.

(10) Request Metrolinx to consider grade separations at Progress and at Danforth on the Stouffville corridor, with the proviso that any option closing existing roads would not be considered. This was amended at Council to add requests for grade separations at Passmore, McNicoll, Huntingwood and Havendale.

At Council, there was an attempt to have items (7) and (8) deferred until after the Waterfront Transit Reset report is considered by Council in 2Q17, effectively putting both of the proposed Etobicoke LRT proposals on the same approval timeframe. The deferral motions did not pass.

Finance:

(13) Approve $71m for preliminary planning and design on SmartTrack (the 6 new stations plus the Eglinton West LRT)

(14) Include $2b in net capital requirements for SmartTrack (stations plus LRT) in the city’s 10 year capital projections.

(15) Approve $95m for settlement of the Georgetown South issue with the province.

(16) Approve $62m for Toronto’s share of 5 grade separation projects.

(17) Approve $60m for GO capital expansion (2 stations at Bloor/Lansdowne and at Spadina on the Barrie corridor). This was amended to ask that staff work with Metrolinx on including the study and design of the Railpath along the Barrie line between Bloor and Dundas West.

(18) Request staff to develop the financing and funding strategy, and report back when a class 3 cost estimate is available for a definitive Council commitment to the SmartTrack project.

Two additional amendments ask for:

strong TTC in developing procurement options, and

negotiations with the province for resumption of operating subsidies.

Commitment to the full cost of the new stations and the Eglinton West LRT will not occur until much more detailed cost estimates come back to Council over the next year (or possibly more). In the event that Council opts not to proceed with any component for which Metrolinx has spent money on development prior to the point of final approval, Council will be responsible to reimburse Metrolinx for its costs.

With respect to the additional grade separation studies requested for the Stouffville line, it is unclear how work on this would be funded, although one might expect Metrolinx to respond with a request for some up-front payment and guaranteed participation in funding if any of these goes ahead.

The Status of Other Major Transit Proposals and Projects

Planning and building any part of SmartTrack should be seen in the wider context of other transit needs and schemes, let alone wider demands on the city’s operating and capital budgets.

The Spadina Subway extension to Vaughan (TYSSE) is scheduled to open at the end of 2017, although startup costs will affect the TTC’s operating budget before any passengers are carried. For 2018, the current estimate of the annual operating cost to Toronto is $30 million including whatever marginal fare revenue the extension will bring in. This line’s capital was covered roughly one third by each level of government, with about 60% of the municipal share falling to Toronto based on the proportion of the route within its boundaries.

The Scarborough Subway from Kennedy Station to Scarborough Town Centre remains the subject of much debate. Although its capital cost is already covered by money from all three levels of government, the proportions are unequal, and any increase to the overall Scarborough transit scheme will be on the city’s tab. The extension will be part of the TTC’s operation along with the net new operating cost, an unknown amount at this time. A critical issue will be whether the cost estimate overall will hold or increase before final project approval, and how this will affect what actually gets built.

The Eglinton Crosstown LRT is now under construction by Metrolinx between Kennedy Station and Mount Dennis (at Weston Road) with a planned 2021 opening, subject to issues about vehicle delivery. This project’s capital cost is funded totally by Ontario, but operating costs will be billed back to Toronto at an anticipated annual net amount of about $40 million in then-current dollars.

The Eglinton East LRT extension from Kennedy Station to University of Toronto Scarborough College is part of the Scarborough package approved with much fanfare earlier in 2016. The capital cost is part of the same “pot” as the Scarborough Subway extension, but how much will actually be available after that extension’s scope and price are firmed up remains to be seen. This will be an early test for Council. Does it really believe in a “network”, are councillors willing to accept the extra cost as part of building our city, or is the argument still dominated by an outlook claiming that tax restraint must take precedence. An updated Scarborough report is expected in coming months.

The Eglinton West LRT extension from Mount Dennis to the Renforth Gateway (at the western city boundary) and then north to Pearson Airport is part of the SmartTrack package. Funding for the line is still uncertain because city plans depend on contributions from Ottawa (likely as part of the Liberal’s infrastructure program), from Mississauga and the airport authority (GTAA) for the portion outside of Toronto. This extension is now the more expensive portion of “SmartTrack”, and ironically appears to survive mainly because of that branding despite opposition from some Etobicoke councillors.

Like the central part of the Crosstown, the two extensions would be operated at the city’s expense even though the lines would be owned by Metrolinx.

The Metrolinx GO RER program is provincially funded, although the matter of the municipal contribution to GO’s capital remains a sore point between Queen’s Park and the GTHA. Toronto will pay for six new stations as part of SmartTrack and will also contribute to two stations on the Barrie corridor (Bloor/Lansdowne and Spadina). GO RER’s net operating costs will all be a provincial responsibility, and the amount of service that will actually operate depends on future subsidy levels for Metrolinx. Similarly, the full build-out of RER fleets, electrification and service levels will depend on future provincial budget decisions.

The Relief Line remains under study thanks to a provincial infusion of $150 million, and both city and TTC staff emphasize that it is a necessary part of Toronto’s future network. While some relief to Yonge line crowding will come from GO RER and the new SmartTrack stations, this will only blunt but not stop the growth in subway demand. A big problem, as readers have discussed here at length, is the project’s scope and the perception that it is intended for a comparatively small part of the system’s ridership, downtowners. The further north the eastern RL branch goes beyond Danforth (to Eglinton or even to Sheppard), the more it performs a service for the city as a whole, but this benefit is routinely underplayed relative to the cost of a new north-south subway. Major capital spending for the Relief Line would not begin until the mid 2020s, but this will still compete with other city priorities.

Waterfront LRT to the west is popular with councillors from southern Etobicoke and has begun to overshadow the shorter eastern LRT line in debates. Both parts of a future waterfront network are under review with the “Reset” study now in progress that has only progressed to the point of developing a moderately long list of options. The strategy appears to be to keep this list as open as possible as long as possible so that political fights over the details are held off at least until there is a better understanding of what will work and what the options might cost. Like the RL, waterfront transit has suffered from being perceived as a “downtown” project despite the scale of development it will have to serve.

The Finch West LRT is still on the books, and Metrolinx hopes to begin work in this in 2017. There remains some opposition to the line, and it will be a test of the Wynne government’s resolve to see whether actual work is pushed back beyond the 2018 election.

The Sheppard East LRT is also still on the books, although it is no secret that many politicians at City Hall and Queen’s Park would love to see this sacrificed for a Sheppard Subway extension. The LRT would be a provincial project with some federal money. There has not yet been any cost sharing commitment to a subway replacement from any government in part because the cost is unknown. It will almost certainly be greater than the LRT line, and like the extension north from Kennedy, will serve a considerably smaller part of Scarborough than the LRT would have. Any decision on this point is likely to fall to the next provincial government, although it will likely be part of the electioneering to reinforce the “subway champion” brand by all parties if this scheme gains traction at Council.

The Richmond Hill extension of the Yonge Subway is a project long-sought by York Region, but the idea is tangled up with network relief from GO RER, the Relief Line and other capacity improvements still pending for the existing subway. Some of these, such as added operating cost for more trains on Line 1 YUS, and capital cost for station capacity impeovements, will fall to Toronto. Whether any of the funding pools now thought to be available for transit projects generally will still be available by the time a decision on Richmond Hill faces council, indeed whether this decision will even be in Toronto Council’s hands, are questions for a future beyond any of the existing governments.

Not to be forgotten for its demand on city funding is the surface transit system including the bus and streetcar network. While billions in new projects preoccupy debates, a long-standing problem faces Toronto with population growth, much of it “downtown”, that has not been matched by additional transit. Indeed, transit service today is little changed from twenty years ago largely because the TTC streetcar fleet sits roughly at late 1990s levels, and traffic congestion has been responsible for service cuts to stretch the available fleet. Current operating budget plans at the TTC foresee a major shortfall in 2017 that appears unlikely to be addressed by a supposedly pro-transit council and mayor, and this will almost certainly continue into the 2018 election year. On the capital side, the TTC requires an additional batch of streetcars beyond the 204 now on order from Bombardier. Both the financing and supply of this fleet expansion are on shaky ground. As for the bus fleet, TTC management seems more preoccupied with simply replacing its existing fleet of hybrid buses with diesels rather than actually expanding the level of bus service to Toronto.

In this context, the SmartTrack decision is only a small part, and Council has yet to be presented with a comprehensive view of the effect building a real transit network, rather than a few lines, will have on its budget and future financing requirements.

Ever since Mayor Tory’s election campaign, we have been told that SmartTrack is a something-for-nothing project that would bring vastly improved transit service to Toronto at little or new added cost to taxpayers. This would occur through the hocus-pocus of Tax Increment Financing TIF).

For those new to the subject, the premise here is that building a new transit line causes property values to rise and new development that would not occur in the absence of the transit investment. That generates new tax revenue that could be used to pay off the construction debt. However, the city’s staff, who are bending over backwards to make Tory’s transit plans workable, do not see TIF as coming close to paying for Toronto’s share of SmartTrack.

Sean Marshall’s article on the Torontoist site, “Here’s What the Development Opportunities at SmartTrack Stations Look Like”

The election premise was that SmartTrack would be built at a cost of $8 billion, would provide a total of 22 stations and frequent service over a route from Markham to the Airport Corporate Centre (south of Pearson Airport). This would be shared equally by all three levels of government making Toronto’s share about $2.7 billion, if one believes the premise of the campaign.

The situation has changed over the past two years. The Eglinton branch of SmartTrack as a railway operation was never a good idea, and it has reverted to the original LRT proposal from Transit City. Tory takes advantage of the more closely-spaced stops on the LRT to bolster his SmartTrack station count. In fact there would be more new LRT stations than SmartTrack/GO stations as the plan now stands.

GO Transit’s Regional Express Rail (RER) program will see widespread infrastructure and service improvements beyond which SmartTrack will only add six new stations. The projected cost of “SmartTrack” has gone down, but the City’s share remains above $2 billion. (The values below do not include cost of financing and risk transfer under Ontario’s procurement system that could bump these numbers by 20%.)

City staff argue that the benefits available from “value uplift” of existing properties will be low, and they have not included this in their calculations. From new development, the added tax revenue would be $857.1 million over the life of the financing scheme, and to be conservative, staff recommend that only half of this be presumed for SmartTrack financing.

This calculation does not address how the services new commercial or residential development will require would be financed if some or all of their new tax revenues were dedicated to SmartTrack.

The chart below shows the considerable spread between TIF and Development Charges (DCs) revenues and the actual requirements for SmartTrack financing, including the LRT line on Eglinton from Mount Dennis to Renforth.

The two percent tax increase would be applied to residential property with only a .67% increase for commercial property. This arises from the City’s policy of rebalancing residential and commercial tax rates, a process that will complete in 2020. Given the timing of borrowing for SmartTrack, one must ask whether the balancing policy should apply in this case, and whether it is time for the commercial sector to pay its full share of taxes that will be collected almost entirely beyond the date when the balancing program completes. (Note that “commercial” includes rental apartment buildings.)

To put this in context, SRRA was co-founded by Iain Dobson who was an advisor to Tory’s election campaign. In May 2014, just as the SmartTrack campaign started, he was appointed to the Metrolinx Board during Glen Murray’s final days as Minister of Transportation. The consulting contract was awarded by Council on a sole source basis.

When SmartTrack was proposed, the intent was to improve access to areas of potential development. The following map shows these areas and their relationship to the SmartTrack corridor.

[Source: SRRA study at p. 21. “Nodes” is misspelled in the map title, and the Downsview node is mistakenly labelled “Lever”. How this might reflect on the care taken on the report I leave to the reader’s judgement.]

Several of the nodes lie outside of Toronto or far from the SmartTrack corridor (blue line and circles). These will either not produce new tax revenue within the 416 or they are too far from ST to benefit from its construction.

A vital question, then, is whether the amount of development contemplated in the January 2016 SRRA report and resulting tax revenues will actually flow to the city. SRRA’s analysis begins with a map of the “TIF Zones”, the areas around stations where tax increases could be expected.

Many of the stations are existing or planned GO stops that will see added service without any SmartTrack investment, and ST adds nothing to them (Milliken, Agincourt, Kennedy, Main, Union, Bloor, Mount Dennis). The map also shows a station at Spadina that will not be part of the upgrades planned for the ST corridor.

Although many zones are shown, most of them will not be affected by SmartTrack as it is now proposed, merely the addition of six stations to the GO Transit map: Finch East, Lawrence East, Gerrard, East Harbour (Lever), Liberty Village and St. Clair.

Although the SRRA report discusses the methodology for analysis of the effect of SmartTrack in the TIF zones, it does not provide a dollar value for the actual tax increments this would produce, nor a description of how this might be calculated. Numbers cited in the City report imply that a more detailed breakdown exists for the SRRA data, but that it has not been published.

An important component of the stimulus attributed to SmartTrack is the construction of additional residential units because ST would make jobs in the outlying centres (notably Markham and the airport) easier to reach and thereby allow reverse commuting. However, there is no “ST service” per se, only the provision of stops where riders might board GO RER trains running less frequently than original claims for ST itself.

Projections for employment and residential growth are shown in charts.

The core area remains the primary location for employment growth, although the projection with SmartTrack diverts some of this to other areas, notably the Queen/Carlaw area (i.e. the Lever site) and Liberty Village. The latter is a bit of a stretch because the station would be located at the northeast end of the district while commercial development, such as there may be, will be toward the southwest.

An important distinction here is that in the “secondary zones” (those along transit corridors other than ST) and in the non-TIF part of the city, the projected employment with ST is generally lower than if ST exists. In other words, potential development that might hold these employees shifts into areas where it contributes to projected TIF revenue.

What is not clear, however, is which of the TIF zones are included for this analysis, in particular those which are at existing GO stops, nor whether the effect of ST’s having no marginal service beyond that provided by GO RER has been take into account. If all zones were included, has the potential revenue due only to SmartTrack been overstated?

A similar problem exists for the calculation of Development Charges because the formula for these, set by provincial law, makes them applicable only to the benefits provided by the expenses undertaken by the City, not to improvements others such as GO might provide nor to improvements existing transit riders might obtain from the new stations/services. This considerably limits the scope for recapture of costs through DCs. (In Scarborough there was was a successful appeal by developers that reduced DCs attributable to the Scarborough Subway. This was based on a higher estimate used for new riders in the DC calculation, and hence the proportion of riders from new development, than in a later estimate.)

There is a more general problem with DCs in that they affect every new building in the city, not just those along the transit corridors. Developers who do not benefit from the projects these charges help to finance are not enthusiastic about building yet more costs into the base borne by would-be purchasers.

Questions for the City

All of this raises many questions about the validity of the calculated TIF revenues available to finance the SmartTrack scheme. I have sent queries about this to City staff, and await a reply. This article will be updated when more information is available.

Council will debate the SmartTrack reports at its meeting beginning on November 8, 2016. Here, in brief, are my questions.

The staff presentation to Council expresses commercial growth in thousands of square feet while SRRA uses employment. These can be converted to each other with a ratio, but what number has been used? How do the City numbers relate to the SRRA values?

The bar graphs in SRRA’s report do not include actual values making direct calculations such as selective inclusion or exclusion of TIF zones difficult. What are the numbers?

Which TIF zones were used for the calculations in the City presentation? Only the six the City is paying for, or zones at all “SmartTrack” stations even though many of these are GO RER locations to which ST will not add any service?

What adjustments in projections have occurred between the original SRRA estimates and those used in current City estimates?

As with TIF, have DCs been calculated only based on the six added “City” stations, or for all of the ST/RER locations?

TIF revenue is projected to grow uniformly and across all included zones. Is this a realistic assumption, how much growth is projected in each zone, and when is this expected to occur?

If the SmartTrack tax were implemented at the same rate across all property classes, at what level would the tax be set?

Oct. 11, 2018: The article requesting comments on charts to display headway reliability has been updated again with a new set of charts showing the distribution of headways by time of day and location in “box and whisker” format.